Buying commercial property is a major step for any business. Whether you’re purchasing an office building, warehouse, storefront, or manufacturing facility, owning real estate can transform your company’s growth and long-term stability.
But commercial properties often cost hundreds of thousands — or even millions — of dollars. That’s why it’s essential to understand the different financing options available and how to structure a deal that works for your business.
This guide breaks down exactly how to finance commercial real estate in 2025, including loan types, requirements, and smart strategies to get approved.
Owning property offers long-term benefits that renting simply can’t match:
Build equity as you pay down the loan.
Lock in costs and avoid rent increases.
Create an asset that appreciates over time.
Customize the property to fit your business needs.
Generate additional income by leasing unused space.
For many small businesses, real estate ownership is a key part of building wealth and stability.
The SBA 504 loan is one of the most popular ways to finance commercial property. It’s designed specifically for real estate and major fixed assets.
How it works:
A bank covers 50% of the project cost.
A Certified Development Company (CDC) covers 40%.
You contribute a 10% down payment.
Key features:
Loan amounts up to $5.5 million
Fixed interest rates and long repayment terms (10–25 years)
Can include land, buildings, renovations, and equipment
Best for: Established businesses planning to occupy at least 51% of the property.
2. SBA 7(a) Loans
The SBA 7(a) loan is more flexible and can also be used to buy, build, or renovate commercial property — plus cover working capital, equipment, or expansion costs.
Key features:
Loan amounts up to $5 million
Terms up to 25 years for real estate
Variable or fixed interest rates
Requires around 10%–20% down payment
Best for: Businesses that want funding for property plus other growth needs.
3. Conventional Commercial Real Estate Loans
Traditional banks and credit unions offer CRE mortgages similar to residential ones — but with different terms and underwriting standards.
Key features:
Loan terms typically 5–20 years with amortizations up to 25 years
Down payments usually 20%–30%
Rates vary based on market conditions and creditworthiness
Best for: Strong, established businesses with excellent credit and financial history.
4. Commercial Bridge Loans
If you need short-term financing to quickly purchase a property or renovate before permanent financing is available, a bridge loan can help.
Key features:
Short terms (6–36 months)
Higher interest rates than traditional loans
Fast funding, sometimes within weeks
Best for: Businesses buying property quickly, renovating before refinancing, or waiting on SBA approval.
5. Commercial Hard Money Loans
Hard money lenders offer asset-based financing, secured primarily by the property itself. These are often used for time-sensitive deals or when traditional financing isn’t available.
Key features:
Short terms (1–3 years)
Higher interest rates and fees
Easier qualification — credit is less important
Best for: Businesses with strong collateral but weaker credit or unconventional property deals.
6. Seller Financing
Sometimes, the property seller may offer financing directly, especially if they own the property outright. This can be a flexible and cost-effective option.
Key features:
Negotiable interest rates and terms
Lower closing costs
Potentially smaller down payment
Best for: Buyers with strong relationships with the seller or who can’t qualify for traditional financing.
Determine your property budget and usage needs
Prepare financial statements and tax returns
Improve your credit score and reduce existing debt
Choose the best loan type for your goals
Gather documentation and submit your application
Credit score: Usually 680+ for conventional loans, 650+ for SBA.
Business financials: Revenue, profit, and cash flow history.
Debt Service Coverage Ratio (DSCR): Most lenders want 1.25 or higher.
Down payment: Typically 10%–30%.
Collateral: The property usually serves as the primary collateral.
Business plan: Especially important for startups or expansion projects.
Strengthen your financials: Pay down debt and boost cash flow before applying.
Show stable revenue: Lenders want proof your business can handle monthly payments.
Offer additional collateral: Personal or business assets can help secure better terms.
Work with SBA-preferred lenders: They’re more experienced and often process loans faster.
Consider pre-approval: This helps you understand how much property you can afford before you start shopping.
When financing commercial real estate, factor in additional costs beyond the property price:
Appraisal and inspection fees
Closing costs (2%–5% of loan amount)
Legal and title fees
Property taxes and insurance
Maintenance, utilities, and ongoing repairs
Planning for these costs upfront ensures your loan is sustainable long-term.
Interest rates remain elevated: SBA and conventional CRE rates are still higher than pre-2022 levels but expected to stabilize mid-2025.
Increased demand for owner-occupied properties: Many small businesses are choosing to own rather than lease.
Flexible financing options: Lenders are offering more hybrid solutions, including partial SBA guarantees and revenue-based repayment models.
Financing commercial real estate is one of the smartest long-term moves your business can make. It builds equity, stabilizes costs, and adds a valuable asset to your balance sheet.
Whether you choose an SBA 504 loan, conventional CRE mortgage, or alternative financing, the key is preparation: strengthen your finances, understand your options, and work with a lender experienced in commercial deals.
With the right strategy, you can secure the perfect property — and position your business for decades of growth and success.